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Delay gives Sanral time to think

The SA National Roads Agency Limited (Sanral) has managed to succeed where audacious others have failed: it has made bedfellows of implacable political opponents Cosatu and the DA.

The two were so opposed to the outrageous e-tolling system that they were planning to paint the highways and byways red and blue, marching together as one in their opposition to the unpopular road tax.

Now that Transport Minister S’bu Ndebele has ordered that the board of directors delay the implementation of the e-tolling system in Gauteng, will Sanral default on the loans it acquired to set up the system or is it going to pass the buck onto the National Treasury?

Now that things have gone belly up, how is the organisation going to convince investors that it can be trusted with their money?

Sanral rightly invited the wrath of business by the way it went about implementing the e-tolling system. It was clumsy and was a good lesson on how not to do things.

Sanral’s lieutenant, Ndebele, decided to retreat and told the organisation: “You are on your own now.”

The SA Chamber of Commerce and Industry (Sacci) and Business Unity SA (Busa) were rightly concerned about the intended toll.

Sacci said yesterday the postponement of the system would provide Sanral with an opportunity to reassess the methodology and cost of tolling in Gauteng.

It said: “Sanral should reconsider the cost of maintaining physical e-toll stores in relation to the utilisation of existing infrastructure in local service stations, post offices or supermarkets, much as is the case with the cellphone ‘pay as you go’ air-time system.”

Busa said it believed that an excellent opportunity had been created for a serious in-depth consultation on alternative modalities to finance the much-needed upgrading of roads.

Markets

Financial markets have become resilient to bad news. Stock markets fell in Asia yesterday after Standard & Poor’s (S&P) cut the credit rating of nine euro zone countries on Friday, including the coveted triple-A grades of France and Austria.

The Sydney Morning Herald reported Tokyo was 1.53 percent lower, Hong Kong lost 1 percent, Sydney slipped 1.17 percent, Shanghai gave up 0.68 percent and Seoul shed 1.34 percent.

However, the shock waves soon ran out of steam as the trading day moved westward. Even in South Africa, which saw Fitch Ratings change the outlook on the country’s BBB+ credit rating from stable to negative, the market rebounded.

The JSE all share index closed 0.8 percent up on the day at 33 205.01 points, from 32 927.4 on Friday. The rand strengthened to trade at R8.0895 to the dollar by 5pm, after weakening to R8.18 at Friday’s close.

European markets were calm, possibly reassured by an announcement from Moody’s Investors Service that it would not follow S&P’s move on France – at least for the moment. Though heads of a European Commission, European Central Bank and International Monetary Fund mission will head for Athens for talks on a second rescue package later this week, market concerns about the troubled euro member were on the back burner.

It is two years since questions about Greece’s sovereign debt first hit the headlines and markets are apparently resigned to its fate – default in one form or another.

And the sinking of the Italian cruise liner Costa Concordia occupied more media space than the actions of the rating agencies or the cost of European debt.

The shares of the parent firm Carnival fell 23 percent on the London Stock Exchange, according to Bloomberg. And the ship’s insurers may face total costs of about E405 million (R4.2 billion). page 18

AfriSam

It’s tempting to describe AfriSam as the Greece of the cement industry and in this context, to see the Public Investment Corporation (PIC) as Germany. And then to take the analogy a little further it might be tempting to liken the creation of debt-riddled, black empowered AfriSam to Greece’s entry into Euroland: both were extremely poorly thought through.

Of course, like all analogies, this one is flawed. AfriSam is fundamentally much sounder than Greece. Its debt problems were foisted upon it by a number of key decision makers who believed that the good times would continue indefinitely and that therefore using an excessive amount of debt to fund the purchase of an overpriced asset would work out in the end.

While some may think that it is easy to criticise in 2012 with the benefit of hindsight, the reality is that back in 2006/07 there were already concerns about the deal.

Similarly, Greece should not have been allowed into Euroland and probably would not have got in without the “help” of the likes of Goldman Sachs.

However, if AfriSam’s debt is “restructured” – to use that quaintly benign term so liked by EU executives – there is a good chance that it will enjoy a sound and prosperous future.

It is difficult to say the same about Greece, although a debt restructuring will certainly help it on its way.

Where the analogy takes most strain, is likening the PIC to Germany. Unlike Germany, the PIC is approaching this very difficult situation from an enlightened perspective and realises that in order to effect some sort of rescue, it, along with almost everyone else, will also take some pain.

Of course the precise amount of pain taken by the different players in the AfriSam saga may never be known, but it does seem likely that the Bunker Hills “investees” will not suffer too much.

Edited by Banele Ginindza. With contributions by Wiseman Khuzwayo, Ethel Hazelhurst and Ann Crotty.

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